In 2017, Transformers: The Last Knight debuted. The fifth installment in the Transformers series, the film was a flop in the United States, where it pulled in a franchise low of $69 million in its opening weekend. But producers did not worry. The film’s fortunes reversed in China, where the movie opened at $123 million, a franchise high.

The Last Knight’s story is not unique. In fact, about 70 percent of Hollywood box office revenue comes from abroad. A film’s international success can, and often does, play a critical role in compensating for a poor domestic performance.

China, in particular, is critical to global box office revenue. As filmmakers increasingly cater to Chinese audiences, it is not just distribution channels that change, but also the films themselves.

Top 10 All-Time Box Office Worldwide Grosses

Source: Box Office Mojo

Starting in 1994, China, which boasts the world’s second-largest (and growing) box office market after North America, allowed ten foreign films a year into the country on a revenue-sharing basis. But in 2001, China acceded to the World Trade Organization (WTO), which made it easier for foreign investment to enter China and opened the door for joint investment and movie coproduction. At around the same time, China increased its annual foreign film quota from ten to twenty.

For China and the United States, this new scenario represented a complex opportunity. Not only did the United States gain access to the large and lucrative Chinese market but also with the advent of movie coproduction, U.S. films could circumvent the quota system and bring in greater shares of revenue. China, wary of a Hollywood invasion, was not immediately sold on the idea of opening its market. But the Chinese ultimately saw coproduction as a way to increase the country’s international influence through culture, believing that this new relationship would spur investments in the Chinese economy, increase tourism, and present the country in a flattering light.

The transition was not seamless. In 2007, the United States filed a complaint with the WTO, which ruled that China’s enduring import restrictions violated its WTO obligations.

U.S. Trade Representative Susan Schwab holds up a pirated DVD as she talks about two WTO cases against China during a news conference in Washington, DC, on April 9, 2007. The cases involved China’s alleged lack of enforcing copyrights and trademarks and China’s barriers to trade in books, music, videos, and movies.

Source: Kevin Lamarque/Reuters

In 2012, the two countries resolved their differences and reached an agreement that established a new quota of thirty-four foreign films per year and guaranteed U.S. producers a larger share of box office revenue.

Quotas and revenue were not the only issues covered by the 2012 agreement. It also mandated that China be swift and transparent in its content review process.

A little background is helpful here: China has no direct equivalent to the Motion Picture Association of America (MPAA) or movie ratings system; instead, a government branch examines and censors content, which at times necessitates distribution of different versions of the same films. The Chinese version of the third Pirates of the Caribbean movie, for example, eliminated half the screen time of a Chinese pirate character whose depiction was deemed racist.

To head off this process, Hollywood movies sometimes incorporate elements to appeal to Chinese audiences, altering characters and storylines and adding foreign actors in minor roles. In the movie Red Dawn, for instance, an invading army was depicted in North Korean, rather than Chinese, uniforms. It is not uncommon for Hollywood studios to place Chinese products in films or to add scenes shot in China to increase their appeal.

British actors Tilda Swinton and Benedict Cumberbatch pose during a promotion of Doctor Strange in Hong Kong, on October 13, 2016. A Doctor Strange screenwriter said that a Tibetan character had been replaced by Swinton to avoid involvement in the debate over China’s territorial claims regarding Tibet.

Source: Bobby Yip/Reuters

Some Chinese-led movies have even been accused of taking this formula and reversing it to attract Western audiences. The Great Wall, a 2016 U.S.-China coproduction financed mostly by Chinese studios, cast an American lead (Matt Damon) who spoke English and used an obvious cultural reference in the title as a draw.

In addition to artistic vision, profit-seeking studios balance questions of theme, language, visuals, and numerous cultural signifiers to succeed. But the next time you look at the summer marquee, crowded by homogeneous superhero movies and loud action thrillers, think of the influence globalization has had in making it that way. Turns out, Transformers: The Last Knight, Iron Man 2, Kung Fu Panda 3, and Furious 7 exist for a reason: they are destined to do well overseas, where culturally specific themes and nuanced dialogue are less important, and sequels and spin-offs make easy money.

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